The Impact of Conventional Force Reductions on Strategic Deterrence: A Game-Theoretic Analysis

Many game-theoretic analyses of deterrence confirm the commonsense view that what determines whether a defender can effectively deter a challenger from an unwanted action is (1) the challenger’s perception of the level of punishment that the defender will be able to impose on the challenger should it take the action, and (2) the challenger’s level of belief about the likelihood of the defender actually carrying out this punishment. Reduction of the defender’s forces may affect both the defender’s ability to retaliate and its perceived willingness to do so. Game-theoretic methods are used to assess how the limits on both of these parameters are related, subject to the condition that deterrence remains effective. The results indicate that the defending side can often make do with smaller forces, provided its (apparent) resolve is high. But force structure is important—the models suggest that implementation of an “all-or-nothing” deployment (as called for by a doctrine of massive retaliation, for example) may reduce not only costs, but also deterrence effectiveness

Banking Reform in China: An Assessment in Macroeconomic Perspective

China has been delaying its adoption of a flexible exchange rate system with free capital flows. The main excuse is that its financial sector is still in its fragile stage and is not able to withstand any external shocks. A big bang approach towards such liberalization will only lead to financial crisis as observed by experiences of many Asia-Pacific countries during the Asian Financial Crisis. With this in mind, this paper attempts to uncover the approach and strategies adopted by China in its banking reform since 1978 and then assess these reform measures in macroeconomic perspective. The paper argues that since China is still lingering on export-oriented strategy in promoting economic growth and monetary independence for demand management is still a long way to go, it is still in China’s best interest not to adopt a flexible exchange rate system at this point of time. As to capital account liberalization, the main focus is to engineer a controlled and systematic capital outflows through outward investment in particular portfolio investment. At the micro level, China should continue its banking reforms until the financial sector is strong enough to withstand the severe pressure of globalization. By then, will China, with its matured financial system be ready to consider the adoption of a flexible exchange system with free capital flows.China, banking reform, non-performing loans, state-owned enterprises, corporate governance, regulation and supervision, financial liberalization

Shrinking Spaces of Humanitarian Protection

The Syrian crisis continues to kill and uproot. More than six million people have been internally displaced, while well over five million have fled the country - with the majority residing in Jordan, Lebanon, and Turkey. Like the spaces of civilian political agency in different parts of the world, ones of humanitarian protection also seem to be shrinking in some of the main refugee-hosting states in the Middle East too. Jordan, Lebanon, and Turkey have taken in millions of Syrian refugees since the beginning of the Syrian war. All three countries followed an open-door policy in the first phase of the Syrian conflict, assuming that the uprising would be as short-lived as its precedents in Tunisia and Egypt. All three states have implemented a temporary protection regime, on the one hand providing fast and relatively non-bureaucratic refuge for Syrians fleeing while on the other excluding them from the special protection that comes with official refugee status. All three states have experienced the shocking disinterest of the international community in the Syrian crisis, which became most apparent in the enduring and severe underfunding of aid efforts in the region. All three states have since almost completely reversed their initial policies, with border closings, migrant criminalisations, and refoulement becoming regular practices. The movement out of the region and towards supposedly "safer" areas like the European Union has engendered a vicious circle of migrant deterrence and pressure on transit states, in which the refugees themselves are mere pawns. The continually progressing walling-off policies of the Global North increase the likelihood of Syrians staying in Jordan, Lebanon, or Turkey. Many would like to return home to rebuild their lives. It is, however, unclear how they will fare if Syria - where the war is still ongoing - is reconstructed in cooperation with the old regime and its cronies. Both internal and external actors need to recognise this in their efforts to reconstruct the state

Murky Waters: Naval Nuclear Dynamics in the Indian Ocean

This study seeks to raise awareness on an issue that is destined to become of great importance, not only to those who closely follow security issues in South Asia, but also to all those with an interest in the fascinating -- and often troubling -- intersections of naval and nuclear strategy. In particular, it seeks to explore how naval nuclear interactions might lead to friction, misperception, and escalation -- and what can be done to prevent or forestall such developments. The report is divided into three main sections. The first section engages in a granular analysis of South Asia's current naval nuclear developments, describing the motivations and aspirations of both actors, as well as the current limitations to these same ambitions. The report then draws on the history of naval nuclear operations during the Cold War before detailing how some of the debates and discussions held during that rich and variegated period in history could potentially apply to contemporary South Asia. Notwithstanding the reflexive skepticism of many in New Delhi and Islamabad, the intellectual contortions of previous generations of nuclear strategists hold an immense value in terms of thinking more deeply about issues as complex as conventional operations under a nuclear shadow, naval nuclear signaling, and escalation control. The third and final section of the report explores the clouded future of naval nuclear dynamics in the Indian Ocean. Beijing might come to play a more important role, both as an enabler for Pakistani naval nuclearization and as a naval nuclear actor in its own right. Finally, ongoing technological developments in anti-submarine warfare (ASW) might have a sizable impact on sea-based deterrence and naval crisis stability in the region

Verification Institutions in Financing Transactions

One of the most common problems in commercial transactions is the resolution of information asymmetries, situations in which one party to the transaction knows more about a relevant fact than the other party. The natural response of the disadvantaged party is to attempt to investigate the transaction for itself – to investigate the matter with due diligence – but often such an investigation will be expensive and, however diligently undertaken, leave the truth of the matter uncertain. A law-centered approach to the problem would call for the development of warranties and covenants that the party with superior information would give to the party with inferior information. Such an approach would rely on lawsuits to prevent and redress any breach of the applicable warranties and covenants. For numerous reasons, however, the formal legal system cannot provide a satisfactory solution to the problem. For one thing, formal legal rules cannot show the context sensitivity necessary to obtain the correct set of assurances from parties with superior information. Thus, formal legal rules by themselves often provide assurances that are either excessive or inadequate in the circumstances of a particular transaction. Similarly, the costs of transacting often make it impractical for the parties to develop those assurances on their own on a case-by-case basis. Finally, even if legislators or contracting parties could devise appropriate assurances, the cost and uncertainty of enforcing those assurances through legal processes is prohibitive. Accordingly, contracting parties often can provide more effective solutions to information problems through the use of privately instituted sanctions that operate either partially or wholly apart from the legal system. In that vein, this article works within the tradition of institutional economics associated with Douglass North. The article starts from the premise that the success and failure of parties in conducting value-increasing transactions cannot be explained solely by reference to the mechanics of supply and demand curves. A crucial part of any account of transactions must analyze the institutional background against which individual parties contract, because the success and failure of transacting parties often depends on the effectiveness of those institutions. I have published a series of articles in the last few years that present a substantial amount of empirical evidence drawn from interviews and case studies about the transacting practices that businesses follow in a variety of commercial contexts involving some form of credit or payment. Each of those articles has attempted to provide a localized theoretical explanation for the behavior that it describes, much of which consists of sophisticated mechanisms for resolving problems of information asymmetry. This article tries to build upon those prior articles by providing a unified theoretical framework for those mechanisms. Specifically, this article contends that all of those mechanisms (as well as the law-centered mechanisms described above) can be analyzed most clearly by reference to a single theme, the bond-like transaction described in Oliver Williamson\u27s seminal paper on the use of hostages in relational contracting

The Winter of Russia’s Discontent

This book aims to trace the different directions that Russia has taken after initiating its full-scale invasion of Ukraine on 24 February 2022. The authors, coming from positions of policy, academia, and practice, employ a transdisciplinary approach to critically engage the question of how Russia as an actor will develop in such an altered paradigm through three lines of argumentation. The first of these themes is centred on Russia’s relations with other major powers and how these ligatures might condition future developments in a global perspective. The second topic relates the effect of the ‘Russian idea’ on domestic dynamics within Russia, as well as with how it has coloured understandings of Russia in the West. Finally, the authors discuss possible future weaknesses for Russia and question whether they will actually be as serious as previously thought. While no singular to the guiding answer can be posited, these dialogues nonetheless contribute to building a solid foundation for discussions within and between transatlantic capitals as well as globally

Ideational imperatives, national identity, and nuclear deterrence theory in East Asia

Since the end of the Cold War, the emphasis on nuclear deterrence has declined. The rise of China has generated a voluminous literature on power transition theory and whether China and the United States can avoid the “Thucydides Trap.” A lacuna in this literature is the role that nuclear deterrence plays in the strategic dynamic between the United States, Japan, and China. This dissertation fills this lacuna by analyzing the role that nuclear deterrence plays in the military strategies of Japan, China, and the United States. How do China and Japan internalize and understand nuclear deterrence theory in ways that depart from the Cold War paradigm? What effect do dissimilar conceptions of nuclear deterrence theory have on the nuclear and conventional force structure and strategies of each country? To understand the reasons for variation in nuclear strategy in East Asia, I argue that contra systemic theories Japan legitimizes its military capabilities in an extended nuclear deterrence framework based on ideationally driven constitutional theory. Departing from Japan’s strategic mindset during the Cold War, China now occupies the place of the “Other” in Japanese national identity, thus in part explaining its shift to a more pro-active military posture. This is to say that it is not China’s rise that preoccupies Japan, but China’s rise that influences Japanese strategic behavior. Lastly, I argue that China’s assertive foreign policy behavior and nuclear strategy are driven not by structural incentives dictated by the international system, but by ideational and historical imperatives under the rubric of the “China Dream (zhongguo meng)” and “National Rejuvenation (minzu fuxing).” Using analyses of Japanese and Chinese language sources, e.g., official government and defense documents, newspapers, books, and journal articles, this dissertation makes two major contributions. First, departing from the dominant and acultural structural realist and game theoretic approaches to nuclear deterrence theory, it offers an alternative “thin constructivist approach” that considers distinct ideational determinants of each country’s approach to nuclear deterrence theory and their effect on nuclear strategy. Second, it uncovers dissimilar approaches to nuclear escalation that depart from Cold War-derived models